For example, outside of agency executions, KeyBank Real Estate Capital was quiet for a few years. But it intends to start making some noise in 2011. “We’ve significantly reduced our real estate exposure, and the top of the house says it’s time to start using the balance sheet again,” says Clay Sublett, national production manager and CMBS director for Cleveland-based KeyBank. “We’re in the market on the balance-sheet side to provide financing for acquisition and renovation.”
The company is now offering LIBOR-based bridge loans—a trend that should gather momentum in 2011. Consider that Wells Fargo dusted off its non-recourse bridge loan program in 2010, as did Prudential Mortgage Capital. And Berkadia, Walker & Dunlop, Greystone, and CWCapital all say that they plan to bring bridge loan programs to the market in 2011.
KeyBank is also considering offering five-year, fixed-rate permanent loans off the balance sheet in 2011, a term where many banks are growing more competitive. “If a borrower wants a five-year deal, there’s a good chance a bank may win,” says Will Baker, a vice president at Bethesda, Md.-based Walker & Dunlop. “It may not meet Freddie Mac’s exit test, and Fannie Mae’s underwriting floor might make it prohibitive to do.” Securitization Stabilization
Simultaneously, the CMBS market is getting closer to once again being a viable execution. Berkadia and Walker & Dunlop recently opened their conduit platforms, and several encouraging signs are gathering for the sector. For example, in mid-November, KeyBank closed its first CMBS deal in more than two years, featuring an all-in rate of 5.75 percent. “The CMBS bonds have sold well, which bodes well for the return of the product,” Sublett says. “We’ll continue to see some continued creep of spread, but will it get to the point that CMBS will compete with the agencies? In the near term, probably not.”
